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ASIC, Regulation

Queensland adviser cops five-year ban

The Australian Securities and Investments Commission (ASIC) has given a Queensland-based financial adviser a five-year ban after surveillance found the practitioner had breached several legal obligations required of him as an authorised representative of an Australian financial services licensee.

Gregory Forster was issued the ban after regulator surveillance uncovered the fact he had not acted in his clients’ best interests and had provided inappropriate advice to them while he was an authorised representative of dealer groups the Breakaway Finance Group, between July 2012 and October 2014, and Millennium 3, between October 2014 and December 2018.

With regard to the advice provided to SMSF clients, ASIC determined Forster had significantly understated the costs of running this type of super fund, with the true running costs being substantially higher than the ones divulged to the client.

The regulator also found Forster recommended risk insurance to clients housed within their superannuation funds where the associated premiums were unaffordable, and in some cases higher than the related contributions being made, effectively eroding the individual’s retirement saving balance. ASIC discovered clients had sought his advice because of concerns over the adequacy of their superannuation balances prior to the insurance recommendations being made.

Further, it was found Forster breached the legal requirements for statements of advice by disclosing his advice fees as a percentage rather than as a dollar amount.

The punishment handed down will be recorded on ASIC’s Financial Advisers Register and on the Banned and Disqualified Persons Register.

“ASIC expects financial advisers to adequately understand their clients’ personal circumstances and take those circumstances into consideration when providing personal advice,” the regulator said in a media release.

“Advisers have a legal obligation to prioritise their clients’ interests and to comply with the best interests duty when providing personal advice.”

The enforcement action comes as part of ASIC’s Wealth Management Project, which is targeting the behaviour of the largest licensees in the Australian market.

Under the initiative, 53 advisers and one director have been banned to date, with five of the disqualifications subject to appeal.

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